Nigeria's Central Bank Again Warns on Crypto Investments

The Central Bank of Nigeria has issued another warning to residents and financial institutions over the risk of cryptocurrency investments.

AccessTimeIconMar 1, 2018 at 4:10 p.m. UTC
Updated Sep 13, 2021 at 7:37 a.m. UTC
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The Central Bank of Nigeria (CBN) has reiterated its warning against cryptocurrency investments.

In a press release issued Wednesday, the CBN warned residents and financial institutions that cryptocurrency investments are unprotected, and investors face risks such as exchange bankruptcy and market volatility.

The release states that dealers in cryptocurrency, such as NairaEx, a Nigeria-based bitcoin trading platform, are "not licensed or regulated by the CBN."

The commentary follows previous messages sent to Nigerian financial institutions in early 2017, in which the CBN advised domestic banks to distance themselves from cryptocurrencies, warning "not to use, hold or transact in any way with the technology."

Despite that, the remarks come at a time when Nigeria has seen growing interest in cryptocurrency investments. According to data from Coindance, weekly trading volume on Localbitcoins in Nigeria surged 500 percent in 2017.

As previously reported by CoinDesk, Nigeria was among the top countries using the "bitcoin" search term, according to Google Trends in 2017, alongside South Africa, Slovenia, Netherlands and Austria.

However, according to a report by Quartz Africa, partially accounting for Nigeria's internet search levels – in addition to controls placed on the country's capital outflow – is a bitcoin-related Ponzi scheme that reportedly resulted in 2 million residents losing a combined $50 million in early 2017.

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